Options trading

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sohil (Querist)
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27 July 2014 I trade only in options.. There is lot of confusion on how turnover is calculated?let say i bought one lot of nifty at 100 and sold for 110. then will turnover be considered only profit portion, that is 10*50=500 or something else?

CMA. CS. Sanjay Gupta

CMA. CS. Sanjay Gupta (Expert)
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27 July 2014 Summation of difference i.e., Profit + loss on all such transactions needs to be considered.

CMA. CS. Sanjay Gupta

CMA. CS. Sanjay Gupta (Expert)
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27 July 2014 In case of derivative trading-Futures and Option- the difference on which the contract is purchased or sold is important. Although the value of contract is number of contract multiplied with the shares price , yet what is actually given or taken is differential amount in contract. For example if you purchase a future contract for Rs 105 for a share having a lot of 100,you pay nothing at the time of buying a contract, yet at the time of expiry if contract , you are either gainer or loser which is determined whether there is positive or negative difference. So, for the purpose of determining the turnover in case of future and options , for the purpose of 44AB , based on the guidance note of ICAI, following items should be considered to constitute turnover:

• The total of positive and negative differences , plus
• Premium received on sale of options is also to be included in turnover ,plus
• In respect of any reverse trades entered, the difference thereon

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